Enterprise Resource Planning system. Does it ring the bell? The term ERP originated back in the 90s introduced by the Gartner Group. ERP systems themselves had a prototype solution dating back to the 70s that was called MRP (Material Requirements Planning) and came in very handy in the manufacturing industry. They helped manage stock and inventories, raw materials and production cycles.
Of course, resource planning could be done on paper. However, with the evolution of business- making it transferred to software. Everything from procurement to distribution, from Human Resources to manufacturing can be managed in one system – ERP software. The technology behind is rather comprehensive, with contemporary ERP integrating AI and machine learning to enhance business processes across the whole chain.
What is ERP?
ERP is the heart of your business operations. If you have ever wondered how giants like Amazon and Apple manage their day-to-day operations across departments globally, the answer is ERP. Most of them are using the German SAP, which is the largest non-American software company. (Actually, Amazon failed to manage its operations via its own system). ERP takes input from one department and puts it into one single system so it is visible to all parties involved. In modern ERP systems processes are automated, with data analytics providing managers with smart solutions that assist sustainable planning. ERP systems integrate procurement, stock, inventories, Human Resources, and almost everything into one platform. From chip production in Taiwan to warehouse logistics in Australia, the product can be tracked through the whole supply chain. Simply put, daily business activities such as accounting, procurement, human resources and supply chain operations can all be managed via multi-channel comprehensive software – Enterprise Resource Planning.
ERP systems guarantee better workflows. Departments have clear communication and are fully aware of the processes so that they can allocate resources or manage accordingly in real-time. Data is the lifeblood of ERPs, and it takes a lot of energy to process and store it. But it takes even more to manually input and distribute it across departments, and even much more to analyze and undertake bigger strategic decisions based on it. ERP enormously systems help you with that work.
Which industries use ERP?
ERP systems are vastly implemented in almost every business niche. Industries that need ERP most are healthcare, hospitality, manufacturing & distribution, construction and professional services. Benefits of ERP for Healthcare include the ability to integrate patient care, compliance, and payroll into one system which will enable faster take of action and decision making so valuable in healthcare. Hospitality does take its advantage out of ERP by putting a puzzle of a million different departments together. As a living organism, the hotel industry, for example, can hardly do without an assisting tool for processing data. It also uses ERP for increasing profits – as the industry is having high operation costs, it is vital to take care of resources timely. Keeping a record of expenses and managing customer and employee data in one place benefits businesses focused on professional services. Everyone can benefit from a properly built ERP software both gigantic corporations and SMEs and yes! Size DOES NOT matter. Nowadays, even smaller family businesses are using ERP in order to have smooth and real time data flows to keep their business afloat graciously surfing over the waves of the highly fluctuating market trends. ERP software is just making life so much easier.
When ERP went wrong (and companies paid & failed)
Things are not always going smoothly, but some latest ERP scandals involve a freaking lot of finances. Imagine how fragile a giant machine that encompasses all company activities could be. When something goes wrong, it affects strategic decisions. Those in their turn can trigger immense losses. An article in digital magazine CIO described some of such cases. An iconic ERP disaster happened when German giant supermarket chain Lidl decided to work together with SAP – the ERP software market shark on the implementation of their new ERP system. Two companies worked on a solution for LIDL that accounted for $500 million in total. Too bad, it did not work out well. In the end, SAP introduced a product with its standard system where input prices were retail ones. Did not work the same way for Lidl in the last decades – their inventory system used the price the company paid for goods, the gross cost. The system caused huge discrepancies and the hassle of bringing the IT department on fire to fix the issues which took months. The amounts of losses were not disclosed. After a merger of cosmetic giant Revlon merged with Elizabeth Arden, the new entity decided to change its ERP provider (from the ones both were satisfied with) to SAP HANA. Things didn’t really work well, ad the CEO’s feedback was “these ERP-related disruptions have caused the company to incur expedited shipping fees and other unanticipated expenses in connection with actions that the company has implemented to remediate the decline in customer service levels, which could continue until the ERP systems issues are resolved.” Choose your ERP software wisely.
How can custom ERP benefit your business?
There is a plentiful of ready-made ERP solutions online, from market leader providers to smaller software companies. However, we are not here to discuss pre-built solutions. Custom ERP is what we are interested in. Among the casual benefits of ERP systems, custom development offers you much more freedom and a bigger competitive advantage.
- Specialized manufacturers with unique processes can customize the control of their entire workflow. While most pre-built software do not allow for configurations any unusual supply chain may not fit the box and simply bug.
- Unique user interface and software design is totally up to the company. It can use its brand guidelines and also optimize the software to fit into company culture and navigation intuition.
- Custom ERPs provide enhanced security measures and are more transparent. Having your own ERP will mean that your company is fully aware of the protocols and algorithms the software is using.
- Flexibility within the system and the ability to change configurations say eliminate some channels or add more is much more flexible than by pre-built ERP systems. This means that your workflows face less risks and stress and are operating autonomously. Also, you are getting maintenance and additional service much more promptly. The service quality is also much better, especially for SMEs.
ERPs in general come in any form – cloud-based or on-premises. This is up to you to pick your favorite, but usually, cloud-based ERP systems are much cheaper. On-premises ERP deployment requires more time and in-house human resources as it is built on your company servers.
What is the cost of a custom ERP software?
Unfortunately, there is no clear answer to that question. The price of ERP software development has a huge spectrum and can vary from a couple of thousands to a couple of millions of US dollars. Do not panic! There is always someone from the Flux team to help you calculate the price of a custom ERP software for your company. The mechanism behind it is quite clear though. There are some factors that determine the cost of implementing custom ERP. Your system architecture or how complex your future software will be. Number of users in the company affects the price levels because of a greater grade of functionality and maintenance hours. Migration is also an important factor. If you are already using a different ERP data transfer is also already included in the price of a newly purchased custom software. Obviously, the more customization the more it is going to cost. Surely, companies focusing on “out-of-the-box” (custom) solutions are more trained to build ERP software within an optimal price range.
Why Getting your own custom ERP will eventually save you money
The blessing of building your own Custom ERP is specificity. Both cost-wise and implementation wise, custom ERP systems can work as a better solution for your business. All-in-one solutions can turn out to be rather costly. What if your business is exactly in need of something specific, coordination of one particular channel or it only lacks smooth communication between selected departments? In this case development of custom ERP will pinpoint your needs and omit the unnecessary features that will also get in the way. Specificity is vital if you are operating a large-scale business, especially if it is using non-standard or industry foreign supply chain patterns. You only pay for what you get.
2. Easier technical implementation/ adjustment
Why adjust to hegemonic corporations that provide ready-made solutions when actually the system can be flexible and precisely satisfy your own needs? Developing a custom ERP system will enable you to optimize workflows and enhance overall company performance. It will be built around your business and its operations and not the other way around. Implementing ERP is supposed to be simple and save you money and resources. Serving its purpose of simplicity it will allow for no additional configurations and changes to your ordinary workflow – operate right away, save time and resources.
3. Better Accessibility and System performance
Custom ERP is initially developed with your preferred system architecture. Changing any module of it at any time is a big privilege of custom ERP. Most pre-built solutions either do not allow for that or charge extra for any sort of configuration. This is not the case with custom CRM. It adjusts to your company’s dynamics and can be adapted to fit your new workflows with your preferred add-ons at any time. Enjoy the maximum performance and full accessibility. Flux team is happy to inform you of further custom ERP possibilities.